The refund applies to franking credits attached to franked dividends paid to a resident individual on or after 1 July 2000 or, if a resident individual receives franked dividends indirectly through a trust or a partnership, to franking credits attached to franked dividends paid to the trust or partnership on or after 1 July 2000.
Franked dividends are payments made out of profits by an Australian resident company to its shareholders that carry 'franking credits' (that is, the company paid tax on its table income at the rate of 30%).
When resident individuals receive franked dividends directly, they include both the amount of the dividends and the franking credits in their assessable income. Subject to satisfying certain anti-avoidance rules, resident individuals can then claim the franking credits as a franking tax offset. The franking tax offset will reduce their tax liability for the income year from all forms of income, not just from dividend income.
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